Global Economic Growth Projected to Slow Amid Rising Barriers

ISLAMABAD: Global economic growth is set to decelerate to 2.6 percent in 2026 and 2.7 percent in 2027, down from 2.9 percent in 2025, as outlined in the latest Trade and Development Report by the United Nations Conference on Trade and Development (UNCTAD). This slowdown is particularly pronounced in developing economies, where growth is expected to drop from 4.7 percent to 4 percent.

The UNCTAD report highlights that governments are increasingly leveraging industrial, trade, financial, and technology policies to achieve economic and national security goals. The ability to access markets and transition to higher-value activities is becoming increasingly contingent on technological advancements, financial resources, and geopolitical dynamics.

This reconfiguration of global trade will have uneven effects on developing countries. While some may find opportunities as alternative suppliers or intermediary hubs, the report warns that maintaining these advantages will necessitate enhanced productive, regulatory, and institutional capabilities.

As global trade reached a record $35 trillion in 2025, the anticipated rise in trade values for 2026 is largely driven by escalating prices amid ongoing energy shocks. Notably, trade between China and the United States has seen a significant decline, indicating shifting trade patterns that could reshape international economic relations.